Organizational Transformation
How Employees Really React to Pay Transparency
As organizations embrace pay transparency, leaders must navigate employee reactions with clarity and care.
December 04, 2025
3 Employee Reactions to Pay Transparency
Pay transparency opens a new kind of conversation at work. For leaders, that conversation can either build trust or test it.
“As soon as pay-related information becomes available, emotion tends to follow,” says Korn Ferry’s Tom McMullen. “People see the numbers and rationales and interpret them through the lens of fairness, value, and self-worth.”
As more organizations share salary ranges and explain how pay decisions are made, employees are reacting in a range of very human ways—relief, confusion, and frustration.
Those emotions can feel risky, but they also give leaders a real opportunity to strengthen trust. What matters is how they respond.
Here’s how each employee reaction tends to show up, and how leaders can turn those moments into understanding and connection.
Employee Reaction #1: Relief That Things Are Finally Clear
For many employees, pay transparency brings a sense of validation. They see openness about pay as proof that their organization really values fairness and accountability. They feel a sense of relief. At last, the company is being honest with us.
That feeling gives leaders an early trust dividend. But it's easy to lose. Relief depends on consistency.
“If employees later find that pay ranges don’t match real decisions, or that explanations and levels of transparency shift from one leader to another, optimism fades pretty quickly,” says McMullen.
The leadership challenge is to turn relief into lasting confidence. That means reinforcing clarity in every discussion about pay. Leaders can:
- Explain the business rationale behind reward frameworks
- Illustrate the link between pay decisions and performance
- Follow up on pay equity reviews by sharing rationale
Strong leaders treat transparency as an ongoing dialogue, not a single disclosure. They use openness as an opportunity to talk about value creation, such as how roles contribute, how growth is recognized, and how performance connects to business success.
“People’s relief turns into real trust in the organization when transparency is matched by action,” says McMullen.
Employee Reaction #2: Confusion About What It Means for Them
Some employees don’t feel relieved at all—they feel uncertain. They look at salary ranges and wonder how they fit within them. They see pay equity statements but still can’t understand how decisions are made.
“Transparency without context raises more questions than it answers,” says McMullen.
Confusion can feel to leaders like resistance, but it’s often just information overload. Employees are trying to connect pay data to their own experience of contribution and opportunity. Leaders who ignore that gap risk losing credibility.
The answer is translation. Leaders need to make pay information meaningful by explaining the organization’s pay philosophy in plain and meaningful language, covering issues like:
- What drives compensation decisions
- What “market competitive” really means
- How performance, skills, and potential shape progression within a salary range
At the manager level, that means giving people leaders the skill and confidence to talk about pay clearly. When managers can describe not only what someone earns but also why, employees begin to see transparency differently. They understand what growth could look like and see the system as something designed for them, not imposed on them.
Communication should also be two-way. The best organizations create safe spaces for questions so employees can seek understanding without fear. When confusion is met with curiosity instead of defensiveness, it turns into engagement.
Employee Reaction #3: Frustration That Things Aren’t Fair
For some employees, transparency comes as a shock. Seeing pay data exposes differences that feel uncomfortable or unfair.
Even when pay structures are sound, perception matters, says McMullen. “Fairness is as much about effective communication as it is about equity,” he says.
This is the hardest reaction to manage and the one that tests credibility most.
The first step is acknowledgment. Dismissing emotion with numbers (“That’s just how the salary works.”) can deepen mistrust. Conversely, acknowledging feelings (“I hear that this feels unfair. Let’s talk about why it looks this way.”) opens the door to understanding.
Leaders also need to explain the “why” behind pay outcomes. What factors determine differences, and how are those factors evaluated?
For organizations still addressing inequities, honesty about progress builds more trust than silence. “You can signal integrity by sharing what’s being reviewed, what actions are underway, and what accountability measures are in place,” says McMullen.
Frustration can also become a moment for development. For example, if employees ask, “Why is that person paid more?” the follow-up question could be, “What skills or experiences could we work on to help you reach that level?” Turning comparison into coaching can transform frustration into motivation.
Leading Through Pay Transparency Reactions
Relief, confusion, and frustration often exist in the same workforce—and sometimes in the same person. The key is responsiveness. Leaders can’t control how people first react, but they can shape what happens next.
Across all three reactions, three principles hold true:
- Clarity: Every employee should understand how pay connects to contribution.
- Consistency: Messages about pay should align across leaders, functions, and regions.
- Care: Conversations about pay should acknowledge that it touches identity and self-worth.
When those principles guide leadership behavior, transparency transcends policy and becomes a measure of organizational maturity.
Why These Conversations Matter
Pay transparency is often introduced to close gaps in compliance and fairness. Yet it also reveals a gap—the one between how leaders think pay should work versus how employees expect it to work. Closing that gap takes conversations, not just data.
“Employees expect honesty, not perfection,” says McMullen. “When leaders can explain imperfection, such as why pay structures evolve, how equity is measured, and what improvements are underway, they earn trust by being authentic.”
And when transparency links to development, it becomes a catalyst for engagement and retention.
The Leadership Imperative
The shift toward pay transparency seems unstoppable. What will set organizations apart is how they lead through the reactions that follow.
Learn how to lead pay conversations that build trust, not tension, in our on-demand webinar, From Transparency to Trust: Proactive Strategies for Communication and Change.
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